If you don't know the difference between the two, read on.

If you own the freehold to your home, it means you own the building and the land it stands on outright in perpetuity. It is essentially ‘free from hold’.This means you’ll be responsible for repairs and maintenance of your home – with no third party having any say in what you do.

Traditionally, most houses were sold as freehold. And, given the choice, freehold is pretty much always the best option.

If you own a leasehold property, you don’t own the land the property is built on, or the building itself. Instead you have a lease from the freeholder to use the property for a given number of years. Leases normally start out with a term of either 99 or 999 years.

Put simply you own your freehold property, but someone else owns your leasehold property.

Mark Baldwin Author

When there are zero years left on the lease, ownership of the property reverts to the freeholder. This applies regardless of any mortgage on the property – whether it’s outstanding or paid off.

In general, the shorter the remaining lease, the less a property is worth. This means it can be difficult to remortgage or sell your property once your lease has fewer than 70 years left.

Leaseholders traditionally pay ground rent. Ground rent is an annual payment from the leaseholder to the freeholder as ‘rent’ for the ground the property sits on. This can be anything from a token amount of £10, up to hundreds of pounds a year. From January this year the government is allowing leasholders to extend their leases without paying ground rent.

Leaseholders pay service charges. The terms of the lease will also set out what the freeholder must do regarding maintenance and repairs of the building and insuring the building. Although the freeholder is responsible for arranging for work to be done, terms in the lease allow the cost to be split between the leaseholders. These costs are known as service charges. ‘Major works’ will normally be scheduled every few years – these normally result in an additional major works bill to the leaseholder.